Public Statements

Health Insurance Industry Fair Competition Act

Floor Speech

Mr. GARRETT of New Jersey. Madam Speaker, I rise in opposition to the bill for a number of substantive reasons. But also, quite honestly, after hearing the comment from the gentleman from California, I also was about to say I rise with concerns as to the process as well.

I appreciate the ranking member's comment as far as potentially moving forward on this. I too have been there in the past, where we do things in committee, in the relevant committees I serve on, serve on Financial Services Committee and have agreements with the other side of the aisle and with the chairman specifically of Financial Services, with Chairman Frank, and then things go to the Rules Committee, and I don't know whether it was a bipartisan obstacle in this case, but be it as it may, problems happen with Rules Committee. And I can tell you with my working with Chairman Frank, he was able to actually get things done then on the floor as far as the substantive amendments done here to get it done. So I hope that we see similar action with regard to this as well that we have seen in other committees.

But I do rise in opposition or concern about this bill with regard to the repeal of the McCarran-Ferguson aspect. And I do so for three points. One has been touched upon, but I want to go into a little bit more detail with regard to the CBO. CBO, Congressional Budget Office, nonpartisan entity, has noted the States already have the laws on the books to prevent what we are really trying to deal with here, price fixing and bid rigging, et cetera.

Furthermore, State insurance commissioners already typically review the rates charged by insurance companies. So what does this basically mean in a nutshell? Basically, States are working in this direction already, and that the passage of this legislation will have a minimal positive impact.

Just a side note. When we talk about State insurance regulation in general, you have to remember when we are talking about the financial situation that we are in right now, it was not the fault of the State regulators of the financial marketplaces that brought us to where we are, it is the fault largely to errors and omissions in the Federal regulators. So if we are trying to cast blame or aspersion on any regulators out there, it should not be on the State regulators, because in essence they have done their jobs, and we should not be throwing other impediments to that getting done.

Second point, someone already mentioned about a report out of the CBO. Let me go into a little bit more specifics about what the CBO said with regard to costs. CBO said, and I quote, ``To the extent that insurers would become subject to additional litigation, their costs and thus their premiums might increase.'' Let me repeat that. Their premiums might increase. So to all the points of the other side of the aisle saying that we are doing this with the good intention of trying to get premiums to come down, what do the experts, the nonpartisan CBO, say? Just the opposite, premiums might go up. So the conclusion there is here is a case where increased litigation costs would actually drive up the cost of insurance, and not bring it down.

Third and final point, touched upon a little bit, and let me go in more detail. This legislation could have the effect of shutting out new entrants, not folks already there, but shutting out new entrants into the marketplace.

This legislation would have the effect of shutting out new entrants into the marketplace. The other side of the aisle has already talked about the fact that they want to have greater competition in this area of health insurance, and I am assuming insurance across the board. But what this will do, as the gentleman and others have already said on the floor, is basically say to the new entrants, to the small companies who want to get into this marketplace, to be able to compete against the large entrenched companies that are already there, you are pushed out, you are locked out. So is that what we want to do with this legislation? That will be the impact.

Let me conclude then. In a letter to Speaker Pelosi, the National Association of State Insurance Commissioners says the following: ``The business of insurance, while exempted from Federal antitrust law, is still subject to State antitrust enforcement actions.'' That is important. ``In fact, even if the McCarran-Ferguson antitrust exemptions were repealed, the State action doctrine exempting them would continue to apply. The most likely result of this repeal would therefore not be increased competition, but a series of lawsuits testing the limits of the State action doctrine, with associated litigation costs being passed along to the consumers in the form of higher premiums.''

The conclusion, Madam Speaker, is more litigation, more harmful consolidation, and more increase to the cost to the consumer, all things that we should be working to oppose. And that is why I do not support the underlying legislation.